NZ dollar drops vs. A$ after upbeat RBA governor speech

March
27 (BusinessDesk) – The New Zealand dollar dropped to a
three-week low against its trans-Tasman counterpart after
Reserve Bank of Australia governor Glenn Stevens delivered
an upbeat speech about prospects for the Australian economy
and didn’t try to “jawbone” the nation’s currency
lower.

The kiwi touched a low of 93.07 Australian cents
this morning, and was trading at 93.10 cents at 8am in
Wellington from 93.59 cents at 5pm yesterday. Australia’s
currency rose to a four-month high of 92.44 US cents
overnight and the New Zealand dollar was pulled along with
it, touching a week-high of 86.20 US cents overnight to
trade at 85.95 cents at 8am, from 85.87 cents at 5pm
yesterday.

The Australian dollar was the best performing
major currency tracked by Reuters overnight after governor
Stevens, speaking at an investor conference in Hong Kong
last night, pointed to early signs the nation is in a
transition from mining-led growth to domestic consumption.
Stevens didn’t repeat previous comments that the Aussie
was overvalued.

“AUD continues to strengthen with
optimism over rebalancing growth and a lack of
‘jawboning’ by RBA governor Stevens driving strength,”
ANZ Bank New Zealand strategist Carrick Lucas and senior FX
strategist Sam Tuck said in a note. “Markets took the lack
of ‘jawboning’ on the AUD as a green light to continue
AUD appreciation. Also taken as a positive were the
‘promising signs’ on growth rebalancing away from mining
investment.”

The kiwi dollar will probably trade between
93 Australian cents and 93.70 cents today, ANZ said.

New
Zealand Reserve Bank deputy governor Grant Spencer will
speak to the investment conference on macro-prudential
policy at 5:30pm New Zealand time tonight.

The release of
New Zealand’s trade balance for February, due at 10:45am,
is unlikely to change the theme of New Zealand dollar
strength today, ANZ said.

The kiwi reached a new
four-month high of 62.49 euro cents overnight and was at
62.34 cents at 8am from 62.16 cents yesterday after European
Central Bank officials signalled a softening of monetary
policy earlier this week.

The local currency slipped to
51.85 British pence from 51.94 pence yesterday and weakened
to 87.72 yen from 87.83 yen. The trade-weighted index was
little changed at 80.18 from 80.16
yesterday.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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